Method And System For Commodity-Based Currency For Payment of Accounts

ABSTRACT

A system and method for permitting gold or other commodities to circulate as currency requires a network of system users that participate in financial transactions where payment is made in units of gold. The gold is kept in secure storage at a deposit site for the benefit of the users. The payments in gold are effected through a computer system having data storage and transaction processing programs that credit or debit the units of account of gold held for the account of each system user.

CROSS-REFERENCE TO RELATED APPLICATIONS

This is a continuation application of copending U.S. patent applicationSer. No. 11/735,769 filed 16 Apr. 2007 entitled “Electronic CashEliminating Payment Risk” which is a continuation of U.S. patentapplication Ser. No. 10/439,717 filed 16 May 2003 entitled “Method andSystem for Commodity-Based Currency for Payment of Accounts” (issued asU.S. Pat. No. 7,206,763 on Apr. 17, 2007), which is a continuation ofU.S. patent application Ser. No. 09/340,566 filed 28 Jun. 1999 (issuedas U.S. Pat. No. 7,143,062) entitled “Electronic Cash EliminatingPayment Risk”, which is a divisional application of U.S. patentapplication Ser. No. 08/921,760 filed 26 Aug. 1997 (issued as U.S. Pat.No. 5,983,207) entitled “Electronic Cash Eliminating Payment Risk”,which is a continuation in part of application Ser. No. 08/465,430,filed 5 Jun. 1995 (issued as U.S. Pat. No. 5,671,364) entitled “Methodand Systems for Commodity-Based Currency for Payment of Accounts andElimination of Payment Risk”; which is a continuation in part ofapplication Ser. No. 08/015,588, 10 Feb. 1993 entitled “Method andSystems for Commodity-Based Currency for Payment of Accounts”; nowabandoned.

FIELD OF THE INVENTION

This invention relates to electronic transaction systems, and morespecifically to a system using an asset-based electronic cash system,for settlement of payment obligations.

BACKGROUND OF THE INVENTION

In the historic past, precious metals circulated as currency. The metalscirculated mainly in the form of coins, and over time improvements weremade to coins to improve their reliability. These improvements included,for example, detailed engraving on the face and obverse of the coin, andmilling of edges. These improvements were intended to prevent theclipping of coins, which was a process that lightened the weight of thecoin. When this practice occurred, the coin was debased, i.e., it lostpurchasing power because the coin no longer constituted the weight ofgold it was purported to constitute.

The circulation of precious metals coins was in time supplanted bycertificates during the period from 1680-1840. By this method ofcurrency, the coins of precious metal remained in safe and securestorage, typically a vault facility maintained by a bank or warehousecompany. A certificate of deposit, a paper document, was issued by thebank or warehouse company and evidenced the deposit of coin that hadbeen made into the facility, and the certificate of deposit begancirculating as a substitute for the coin. Circulation of thecertificate, in lieu of the coins, offered numerous advantages. Paperwas easier to transport, and a relatively small amount of certificatescould be used to complete transactions of high value. There was lessrisk of debasement of the coin that was stored. However, while theseadvantages significantly improved the circulating medium, there werealso disadvantages. These included forgery of paper certificates, fraudand bankruptcy of the bank or warehouse company.

As a result, another improvement to currency soon emerged. Thisimprovement in the nature of currency was the creation of depositcurrency. Deposit currency is a process that enables paper money and/orcoin to circulate as currency. By this method of currency, the coins ofprecious metal and/or the paper currency that represented a claim tothose coins, remained in safe and secure storage, typically a vaultfacility maintained by a bank. Circa 1840 to the present, thecirculation of coin and paper money for commercial transactions wassupplanted by deposit currency, i.e., money is now moved around mainlyby checks and wire transfers.

The creation of deposit currency significantly improved the circulatingmedium. It was no longer necessary to extensively rely on coins, whichcould be clipped, debased, etc., nor on paper money, which could becounterfeited. By moving monetary units of account on deposit in onebank to another bank, the process of payments was significantlyenhanced.

However, in time unforeseen problems have appeared which detract fromthe use of deposit currency as a medium of exchange. The institutions inwhich clients lodge their money and deposit currency sometimes areunable to meet their commitment to their clients to return the clients'coin or paper money. The institutions, typically banks, which accept thedeposits of coin and paper money from their client, loan the coin andpaper money to other clients. Occasionally these borrowers failed torepay their loans, causing the bank to take a loss. Cumulatively theselosses can be large enough to cause the bank to fail. A bank in thatcase no longer has sufficient coin or paper money to repay itsliabilities to its clients.

The above described scenario constitutes what is known as “paymentrisk.” As illustrated above, payment risk arises in conventional bankingsystems where a financial institution accepts deposits, then in turnloans out that money to others. This is known as “fractional banking,”in that the financial institution only keeps on hand a fraction of theactual assets it is holding for the account of its depositors. If thefinancial institution fails due to bad loans or fraud, the financialinstitution lacks sufficient assets to pay off its depositors. Thispractice has lead to significant losses in connection with financialinstitution failures such as at the Herstatt Bank in Germany and theBCCI scandal.

A related payment risk arises due to the fluctuating value of nationalcurrencies due to inflation and currency exchange rate variationsdependent on the economy of the nation issuing the currency. Thus, thereis a risk inherently associated with the use of national currencies.

A further problem of current payment systems is the problem of “float.”“Float” is the amount of time a payee must wait for a transaction to beprocessed. This is considered an expense because of the unavailabilityof funds, which represents opportunity costs.

In order to eliminate these payment risks and float, I have invented asystem which uses an asset (like gold) instead of a liability (nationalcurrency) for settling payments.

SUMMARY OF THE INVENTION

It is an object of the invention to provide a method and system for acommodity-based currency for payment of accounts that avoids theproblems of prior art and deposit currency account systems. It is anobject of the invention to provide such a system and method which isindependent of external events that cause fluctuations in value ofnational currencies. It is an object of the invention to provide such asystem and method that permits gold and other commodities to circulateas deposit currency.

In accordance with one embodiment of the invention, a commodity basedcurrency system for paying accounts comprises: at least one deposit sitehaving secure facilities for storage of a valuable commodity; an amountof a commodity stored at the deposit site; and a computer system forimplementing and recording transactions defined in units of thecommodity. The accounting of the transactions is denominated in units ofthe commodity. The computer system includes: an account data storagedevice, a transaction data storage means, and a transaction postingmeans. The account data storage device is capable of recording dataidentifying persons and a number of units of the commodity credited toeach of the persons and held in the deposit site for the account of thepersons. The transaction data storage device receives records oftransactions denominated in units of the commodity. These records oftransactions include an identification of a person who will receive adebit, a person who will receive a credit, the amount of such debit, theamount of such credit, and the identity of the deposit site. Thetransaction posting means extracts data from the records of transactionsand posts debits and credits to the account data storage device toupdate the data identifying the number of units of the commodity heldfor the account of each person involved in the transaction.

The system preferably permits remote access to submit transactionrecords, and provides verification means for verifying the bona fides ofthe person seeking to submit transaction records. A remote terminal isprovided at the deposit site to enter information regarding thecommodity held at the deposit site for the account of a person.

In a preferred embodiment, the commodity comprises a precious metal,such as silver, or most preferably, gold of a specified purity.

Other objects, aspects and features of the present invention in additionto those mentioned above will be pointed out in or will be understoodfrom the following detailed description provided in conjunction with theaccompanying drawings.

BRIEF DESCRIPTION OF THE DRAWING

FIG. 1 is a schematic illustration of the operation of the invention.

DESCRIPTION OF THE PREFERRED EMBODIMENT

I hereby incorporate by reference my prior patents, U.S. Pat. Nos.5,671,364; 5,983,207; and 6,415,271; 7,143,062; and 7,206,763; in theirentirety.

A glossary of the terms used in the present application is providedhereafter.

As used herein, a “computer system” comprises at least the followingcomponents: a central processing unit (CPU), a display device, a datastorage device, and a printing capability.

As used herein, “money” is a tool that enables the participants in anexchange of goods and services to define value of the exchange.

As used herein, “currency” means the physical representation of money.Currency is the medium of exchange enabling producers and consumers toexchange goods and services indirectly for other goods and services.Currency is denominated into units of account, which permits economiccalculation by the participants in the exchange. Currency also is ameans of payment which enables the participants in an exchange to settletheir respective obligation.

As used herein, “cash currency” is the paper notes issued by a country'scentral bank. Each note is denominated in terms of a fixed number ofunits of account.

As used herein, “deposit currency” is the liability of the banks thataccept deposits of a country's national currency.

As used herein, a “clearing house” is a center for processingtransactions to credit and debit accounts held by parties to thetransaction.

This invention relates to a system and method for payment and receipt ofmonetary units of account. More specifically, it relates to a clearinghouse 10 that is the center of an interactive communications networkthat will enable gold and/or other commodities to be used and freelyexchanged as a means of payment, i.e., to be used as currency.

The clearing house is intended to develop an extensive user base locatedwithin the United States and globally that will use gold and/or othercommodities as a currency for effecting payments in cross-border as wellas intra-country commercial transactions. Since this currency ispreferably a defined weight of gold or other commodity, the currency ofthe clearing house will be non-national.

Each system user individually establishes a depository account with theclearing house either by storing gold or other commodity at anaffiliated deposit site 22 or by purchasing gold or other commodityalready stored at such a deposit site. The deposit site will confirm thedeposit of the commodity to the clearing house and transmit theinformation via remote terminal 24 to the computer system 26 describedhereafter. Each account will be denominated in the currency of theclearing house, which is a defined quantity of gold or other commodity(for example, ounces, or kilograms of gold, barrels of oil, etc.). Everysystem user that establishes an account relationship with the clearinghouse will become a participant in the network of system users using thepayment processing capability provided by the clearing house.

The network of individuals, corporations and other entities that areclients of the clearing house will use communications and informationprocessing technology made available to them by the clearing house toeffect transactions in the commodity denominated currency of theclearing house. They will (1) make payments to other members of thenetwork, generally their suppliers, and (2) collect payments from othermembers of the network, generally their customers.

Though it is envisioned that the clearing house will initially establishworking relationships with corporations involved in international tradeand commerce, the economies of scale that will be generated by anincreasing number of transactions completed through the clearing housemeans that in time the scope of the clearing house activities can bebroadened to include transactions by individuals. The high volumes ofpayments and receipts now undertaken daily in the course of normaleconomic activity indicate that the potential opportunities for theapplication of this invention are very significant.

This invention therefore provides a system and method of settling ofpayments for transactions through a clearing house with a global scopeof operation (hereafter referred to as “Global Clearing House” or“GCH”).

The advantages that GCH will offer system users, which differentiatesits services from other payments mechanisms now available, include (1)the ability to complete a payment without incurring the risk nowinherent in existing mechanisms used to complete payment transactions,(i.e., possible loss of funds deposited in a bank which is seized orwhich is insolvent), (2) the ability for a client to receive immediatecredit and to be immediately informed that monetary units of accounthave been added to the account kept by the client at GCH, (3) theability for a client to make immediate payment and to be immediatelyinformed that monetary units of account have been deducted from theaccount kept by the client at GCH, (4) the ability of a client tomaintain monetary units of account on deposit without being exposed tothe practice of fractional reserve banking (wherein banks do not keep asa reserve assets equal to the amount and identity of their liabilities)and thereby avoid the risks of partial or total loss of the deposit as aresult of the overissue of the currency (where banks create liabilitiesfor currency based on assets which they do not have on hand), (5) theability of a client to maintain monetary units of account on depositwithout being exposed to the risk that those monetary units of accountwill be loaned by the institution, and (6) the ability to use goldand/or other commodities as currency.

Gold is the preferred commodity as it is a low-risk medium of paymentand it has a known value. Gold extinguishes the obligation arising froma transaction in trade and commerce. When the seller receives gold,there is no further obligation because the product sold has beenexchanged for a tangible asset. However, a national currency does notnecessarily extinguish the obligation incurred when the buyer acquires aproduct. The seller does not receive a tangible asset. When the sellerinstead receives a national currency, the seller receives a promise topay, which is principally dependent upon the central bank which issuesthe national currency. The obligation can be further at risk if thepayment clearing bank is unable to meet its obligations to deliver thecurrency specified in a transaction.

Using gold as currency also permits the creation of financialinstruments and futures contracts denominated in terms of a statedweight of gold. For example, a futures contract for delivery of soybeanscould be designated payable in gold units of account instead of in U.S.Dollars. Other commonly traded commodities, i.e., crude oil,agricultural products, etc., could be similarly designated in gold unitsof account. The transactions would then be processed and cleared throughGCH.

The above advantages differentiate the commodity currency processed byGCH from any deposit currency now in use.

Referring now to FIG. 1, a commodity based currency system for payingaccounts in accordance with the invention comprises: at least onedeposit site; an amount of a commodity stored at the deposit site; and acomputer system for implementing and recording transactions defined inunits of the commodity.

The Deposit Sites

Preferably there are several deposit sites for storing the commodity.The deposit sites are preferably located in countries having secure andstable political systems where there is minimal risk of misappropriationof the asset by the government or private persons. The deposit site willtypically be a bank; however, other secure vault facilities could alsoserve as the deposit site. Typical site locations would be London, NewYork, Zurich and Tokyo, as well as other locations.

The deposit site provides facilities for safe and secure storage of thecommodity to be used for currency. Typically such deposit site consistsof a protected vault. The bank or protected vault that is servicing theGCH system users will preferably have the ability to (1) receive thecommodity from a client, (2) return the commodity to a client, (3) testthe purity of the commodity, (4) measure the weight and/or otherphysical properties of the commodity, (5) provide identifyinginformation for each parcel of the commodity placed within the depositsite in order to distinguish between the different parcels belonging tothe different clients of the deposit site, (6) report to the client thequantity of the commodity stored by the client at the deposit site, and(7) provide identifying information and the capability to physicallyseparate from the total quantity of the commodity stored in the depositsite those parcels of the commodity to be designated for use ascurrency. These functions can be provided by the bank or vault or bytrusted service providers.

The Commodity

The commodity must be non-perishable, and most preferably has a highratio of value to weight and volume. In a preferred embodiment, thecommodity comprises a precious metal, such as silver, or mostpreferably, gold of a specified purity. However, several othercommodities, notably crude oil and other petroleum products may alsoserve as the commodity used to designate units of account in the system.

Gold has three unique advantages as money. Each of these are inherent togold, and they are not advantages available to any national currency.

When defined to a precise weight, gold is a consistent and unvaryingunit of account. An ounce of gold is knowable and unvarying. An ouncetoday is the same as an ounce yesterday or an ounce twenty years ago.However, a national currency does not have these characteristics. A U.S.Dollar or a Deutschemark or a Swiss Franc on deposit in Bank AAA is notthe same as the same currency on deposit at Bank CCC because these twobanks have different levels of capital and a different mix of assets.Therefore, Dollars or other currencies on deposit in these unrelatedinstitutions have entirely different levels of risk, so the nationalcurrency is not a consistent and unvarying unit of account.

Gold is non-national money, which means that it is outside the scope ofgovernment. Therefore, gold is not subject to the political processbecause it is beyond the control of governments, their central banks andmonetary authorities. The result is that gold over long periods of timetends to hold its purchasing power better than any national currency.And as set forth above, gold extinguishes an obligation on delivery.

Opening of an Account

The system and process of the invention require system users toestablish account relationships with GCH. The account relationship isconfirmed when a system user deposits gold with GCH in one or more ofGCH's approved depositories. A system user makes a gold deposit orpurchases another person's gold deposit and does so at a specific site.The deposit site then notifies the GCH by data transmission of theidentity of a person and units of gold held for the account of thatperson that gold is available for settling transactions for the benefitof that user.

In particular, additions of currency to the system will be made in thefollowing way: (1) the system user transfers a quantity of the commodityto be used as currency to a deposit site; or (2) the system usernotifies the deposit site to earmark all or part of the quantity of thecommodity stored at the deposit site by the user. In the first case, thedeposit site verifies the receipt of the commodity and providesconfirmation to the system user and GCH specifying the quantity and/orother physical attributes of the commodity. In the second case, thedeposit site separates the earmarked parcels of the commodity to be usedas currency in a separate area of the deposit site designated solely foruse of storing earmarked parcels of the commodity comprising thecurrency of the GCH. Once the physical transfer is completed, thedeposit site notifies the GCH that the commodity has been established ascurrency by the system user.

The GCH then credits the account previously established by the systemuser at the GCH with the quantity of the commodity specified by thesystem user which has been established as currency and has been creditedto the account of the system user. Once established in this way, thecommodity earmarked at the deposit site becomes eligible for use ascurrency, and the system user may transfer all or part of the commodityunits of account to another account within the system.

The balance sheet of GCH reflects (1) the cumulative deposits of itssystem users, which are liabilities of GCH, and (2) the identical amountof gold as its assets. GCH's financial position is presented in TableNo. 1.

TABLE NO. 1 GCH Balance Sheet Before Transactions Assets LiabilitiesGold Stored in London 100 oz. Client A 100 oz. London Gold Stored inZurich 100 oz. Client A 100 oz. Zurich Gold Stored in New York 175 oz.Client B 175 oz. New York 375 oz. 375 oz.

The Computer System

Once a system user establishes an account relationship with GCH, theuser has access to an interactive communications network giving accessto a computer system. When two system users enter into a tradetransaction between themselves, they effect payment through thisnetwork. In a typical implementation of the invention, the interactivecommunications network is the internet.

The GCH computer system is adapted for storing of data and entering theaccounts and the transactions affecting the accounts of the participantsin the system. Each GCH system user is provided with the means toconduct transactions in the user's account maintained with the GCH. Eachaccount typically includes the name, address and other identifyinginformation of the account holder, a unique account number assigned toeach account, an inventory of transactions conducted through eachaccount, and the means to verify the accuracy and authenticity of eachtransaction conducted for an account when instructed by the accountholder. In logging to the system, the user will typically use an accountnumber to identify himself, and will use a password as verification togain access the account.

The computer system thus includes an account data storage device, atransaction data storage means, and a transaction posting means.

The account data storage device is capable of recording data identifyingthe system user and a number of units of the commodity credited to theuser and held for the account of the user.

The transaction data storage means receives and stores records oftransactions which are denominated in units of the commodity. Theserecords of transactions include an identification of a system user whowill receive a debit, a system user who will receive a credit, theamount of such debit, the amount of such credit, and, optionally, mayalso identify the identity of the deposit site.

The transaction posting means extracts data from the records oftransactions and posts debits and credits to the account data storagedevice to instantly update the data identifying the number of units ofthe commodity held for the account of each person involved in thetransaction.

The system includes a remote terminal 24 at the deposit site 22 forreceiving and sending data to the computer system upon opening orclosing of an account and/or when there is a transfer of units of gold.The data is transmitted from the deposit site to the transaction datastorage device and includes an identification of units of the commodity20 held at the site for the account of such person.

The system preferably permits remote access from client terminals 26 tosubmit transaction records to the system 10, and provides verificationmeans for verifying the bona fides of the person seeking to submittransaction records. This permits the user access to the computer systemthrough an interactive communications network from a location remotefrom either the GCH or the deposit site.

Typically, the account holder will use a computer which instructs amodem which provides access to the computer system by dialing telephonenumbers available to the GCH system users; or will access the system viaan encrypted internet connection. Once the centralized computer of theGCH 10 is accessed in this way and once entry is made by providing aseries of passwords or security codes to prevent unwarranted andunwanted access, the GCH client has access to the chosen account towhich it is the account holder. Once access has been granted, theaccount holder may review the account, conduct transactions for theaccount, review past transactions or other data stored by thecentralized computer for the account.

Access to the centralized computer of the GCH permits real time,instantaneous transfers of units of account. To transfer units ofaccount of the commodity in order to complete a financial obligation,the system user (hereafter the “paying client”) instructs the GCH (1) todebit from the paying client's account a specified quantity of thecommodity, (2) the day and time the specified quantity of the commodityis to be transferred, (3) the account number and other verifyinginformation to specify the identity of the client (hereafter the“receiving client”) to whom the payment will be made. A password mayoptionally be required at the time of posting a transaction, in order toprovide security and protection from unauthorized transactions, however,in most instances, the use of a password at logon to the system will beconsidered sufficient.

The centralized computer of the GCH collects the transfer instructionsprovided by the paying client and enters those instructions into atransaction file maintained to record the authorized transactions forall paying clients. When the appointed day and time is reached, thecentralized computer of the GCH completes the transaction by debitingthe account of the paying client for the quantity of the commodityinstructed by the paying client, and simultaneously credits the accountof the receiving client instructed by the paying client. The credit madeto the account of the receiving client is made simultaneously as a debitof the account of the paying client. Once the credit of the commodityunits of account is made to the designated account of the receivingclient, the receiving client has immediate access to those commodityunits of account, thereby extinguishing the obligation of the payingclient to the receiving client.

For example, A and B enter into a transaction in which A agrees topurchase from B a specific good/service. The price is agreed betweenthem to be 25 ounces of gold. GCH is then instructed by A to debit A'saccount for 25.0000 ounces and pay this amount to B's account.Accounting of gold in ounces should be to at least four decimal points,though five or more decimal points could be used if greater precision inthe measurement of value in the exchange is required.

GCH confirms immediate payment to both A and B. The gold is not movedfrom the storage facility. It remains in the same location, but it isnow stored there by GCH for the account of B instead of A. This changedposition is presented in Table No. 2.

The total assets and liabilities of GCH remain unchanged. Only thecomposition of the liabilities changes, and it only changes after GCHperforms its payments function.

The net result of this transaction is that gold is circulating ascurrency. Gold is used as a monetary unit of account in a transaction oftrade and commerce entered into between A and B, and it therefore iscirculating as currency even though it remains in safe and securestorage.

TABLE NO. 2 GCH Balance Sheet After Transactions Assets Liabilities GoldStored in London 100 oz. Client A 100 oz. London Gold Stored in Zurich100 oz. Client A  75 oz. Zurich Client B  25 oz. Zurich Gold Stored inNew York 175 oz. Client B 175 oz. New York 375 oz. 375 oz.

GCH uses a tangible asset (i.e., a defined weight of gold) as the basicmonetary unit of account. GCH is a clearing house with assets that areidentical to its liabilities. In other words, GCH does not monetizedebts and thereby turn the debt obligations of borrowers into currency.GCH will have on hand as an asset the total weight of gold it owes toits depository clients. The Monetary Balance Sheet of GCH issubstantially different than that of the Dollar, any national currency,or any existent bank as shown in Table 3.

TABLE NO. 3 Monetary Balance Sheet of Global Clearing House (Denominatedin Units of Account Called Ounces) “Quality of Money” “Quantity ofMoney” Assets Liabilities Gold Stored in Secure Storage 375 oz. ClientDeposits 375 oz. 375 oz. 375 oz.

In contrast to any national currency, the “quality of money” isidentical to the “quantity of money” on the balance sheet of GCH. Thiscommon identity of assets and liabilities illustrates a unique advantageavailable to users of the invention. Identical assets and liabilitiesprovides certainty that payments will be made as directed and withoutrisk.

Closing of an Account

A system user can subsequently “cash out” of the GCH system by either(1) selling his gold interest to another; (2) withdrawing the user'sgold deposited at a deposit site. At this point, the deposit site willnotify the GCH that the system user's gold units of account are nolonger available to the system, for example, by entering information inthe remote terminal at the deposit site.

In summary, the invention comprises an electronic commodity based systemfor conducting financial transactions, comprising: (1) at least onedeposit site having secure facilities for storage of a commodity; (2) aninventory of a valuable commodity stored in the secure facilities at adeposit site, with units of the valuable commodity held at the depositsite for an identified account; and (3) a computer system for processingdata for accounting transactions denominated in units of the commodity.As would be understood, the identified account can be owned by anindividual or a legal entity, such as a corporation, limited liabilitycompany, or partnership, or a government. The account can be“identified” simply by an account number, such as has been provided byso-called “numbered” Swiss or Caribbean bank accounts, or by a morecomplete information set specifying name, address, contact etc. Theidentification must be such to allow debiting and crediting of theproper parties to any transaction. It should be noted that the unitsheld for an identified account can be a direct holding, e.g., specificunits of commodity held at a specific site can be held for a specificaccount, or a group of units of commodity can be held for a group ofaccounts, or an indirect holding, e.g., the units of commodity held atone or more sites can be held in a trust for the benefit of all of theaccounts open in the system.

The computer system has data storage devices such as a hard drive,optical drive, RAM memory devices, flash memory devices, optical storageunits or the like, and data processing software that records a balanceof units of commodity credited to each account. The software receivesrecords of transactions transferring an interest defined in units of thecommodity from one account to another identified account. The records oftransactions include at least an identification of an account that willreceive a debit, an account that will receive a credit, an amount of adebit of a quantity of said units of said commodity, and an amount of acredit of a quantity of said units of said commodity. These records oftransactions are entered to update data regarding the balance of unitsof commodity credited to each account. The electronic commodity basedsystem permits persons to conduct financial transactions withoutreliance on national currencies in conducting said financialtransactions whereby obligations, of a person receiving a said debit ofsaid units of said commodity of the person's account, to an other personreceiving a said credit of said units of said commodity to the otherperson's account, are extinguished upon posting of said records oftransactions, thereby eliminating payment risk.

It is to be appreciated that the foregoing is illustrative and notlimiting of the invention, and that various changes and modifications tothe preferred embodiments described above will be apparent to thoseskilled in the art. Such changes and modifications can be made withoutdeparting from the spirit and scope of the present invention, and it istherefore intended that such changes and modifications be covered by thefollowing claims.

1. An electronic commodity based system for conducting paymenttransactions, comprising: at least one deposit site having securefacilities for storage of a commodity; an inventory of a valuablecommodity stored in said secure facilities at a said deposit site, saidinventory including a quantity of units of said valuable commodity heldat said deposit site for a depository account of at least one identifiedperson; a computer payment system for processing data for conductingpayment transactions denominated in said units of said commodity, having(a) an account data storage device for recording data comprising anidentification of persons and a quantity of units of said commoditycredited to said account of each of said persons and an identificationof said deposit site where said units of commodity are held, (b) atransaction data storage device for receiving records of paymenttransactions denominated in units of said commodity from a said personidentified as having a quantity of said units of said commodity creditedto said account of said person, said records of payment transactionsincluding at least an identification of a person who will receive adebit, a person who will receive a credit, an amount of a debit of aquantity of said units of said commodity held at a deposit site, anamount of a credit of a quantity of said units of said commodity held ata deposit site, and an identification of the deposit site where saidquantity of said units of said commodity are held, (c) a transactionposting device for posting said records of payment transactions to saidaccount data storage device to update said data comprising anidentification of persons and a quantity of units of said commoditycredited to said account of said persons at an identified deposit site;a remote terminal located at said deposit site for receiving and sendingdata to said computer system, said data identifying a person and aquantity of units of said commodity held at said deposit site for anaccount of said person; the quantity of units of said commodity creditedto said accounts of each of said persons recorded to said account datastorage device always being equal to the inventory of said commoditybeing stored in said secure facilities, and said electronic commoditybased system permitting persons to conduct payment transactions andproviding immediate direct payment transactions by an immediate transferof units of said commodity from said person who receives a debit to saidperson who receives a credit, without reliance on national currencies inconducting said payment transactions and wherein obligations, of aperson receiving a said debit of said units of said commodity held at adeposit site, to another person receiving a said credit of said units ofsaid commodity held at a said deposit site, are extinguished uponposting of said records of payment transactions; said electroniccommodity based system eliminating payment risk.
 2. A system inaccordance with claim 1 wherein said commodity comprises a preciousmetal.
 3. A system in accordance with claim 2 wherein said preciousmetal comprises gold.
 4. A system in accordance with claim 2 whereinsaid precious metal comprises silver.
 5. A system in accordance withclaim 3 wherein said gold is specified to a selected purity.
 6. A systemin accordance with claim 2 further comprising means for remote access tosubmit records of transactions to instantly debit and credit a person'saccounts.
 7. A system in accordance with claim 6 further comprisingverification means for verifying the identity of said person obtainingaccess to said computer system and for confirming that said person isauthorized to submit records of transactions to said transaction storagedevice.
 8. A system in accordance with claim 2 wherein said units ofsaid commodity are designated as a payment for a futures contract of adifferent commodity.
 9. An electronic gold based system for conductingfinancial transactions, comprising: at least one deposit site having aprotected vault; an inventory of gold stored in said protected vault ata said deposit site, said inventory including a quantity of units ofgold held at said deposit site for a depository account of at least oneidentified person; a computer payment system for processing data forconducting payment transactions denominated in units of gold, having (a)an inventory data storage device for recording data identifying anamount of gold stored at a said deposit site, (b) an account datastorage device for recording data comprising an identification of aperson and a quantity of said units of gold stored at said deposit sitecredited to an account of said person, (c) a verification means forverifying the identity of a person obtaining access to said computersystem and for confirming that such person is authorized to submitrecords of transactions, (d) a transaction data storage means forreceiving, from a person obtaining access to said computer system,records of payment transactions denominated in said units of gold, saidrecords of payment transactions including at least an identification ofa person who will receive a debit, a person who will receive a credit,an amount of said debit in said units of gold, an amount of said creditin said units of gold, and an identification of the deposit site wheresaid units of gold are located, (e) a transaction posting means forposting said records of payment transactions to said account datastorage device to update said data comprising an identification of aperson and of a number of units of said gold held at a said deposit sitefor the account of the person; a remote terminal located at said depositsite for receiving and sending data to said computer system, said dataidentifying a person and a quantity of units of gold held at saiddeposit site for an account of said person; the quantity of units ofsaid gold credited to said accounts of each of said persons recorded tosaid account data storage device always being equal to the inventory ofsaid gold being stored in said secure facilities, and said electronicgold based system permitting persons to conduct payment transactions andproviding immediate direct payment transactions by an immediate transferof units of said commodity from said person who receives a debit to saidperson who receives a credit, without reliance on national currencies inconducting said payment transactions and wherein obligations, of aperson receiving a said debit of said units of said commodity held at adeposit site, to another person receiving a said credit of said units ofsaid commodity held at a said deposit site, are extinguished uponposting of said records of payment transactions; said electronic goldbased system eliminating payment risk.
 10. A system in accordance withclaim 9 further comprising means for remote access to said computersystem to submit and store records of transactions.
 11. A system inaccordance with claim 10 wherein said gold is of a selected purity. 12.A system in accordance with claim 9 wherein said gold units of accountare designated as a required payment in a futures contract for acommodity other than gold.
 13. An electronic commodity based system forconducting financial transactions, comprising: at least one deposit sitehaving secure facilities for storage of a valuable commodity; aninventory of a valuable commodity stored in said secure facilities at asaid deposit site, said inventory including a quantity of units of saidvaluable commodity held at said deposit site for at least one identifiedaccount; a computer system for processing data for accountingtransactions denominated in said units of said valuable commodity, saidcomputer system having at least one data storage device and dataprocessing software that records a balance of units of valuablecommodity credited to each said account; said software being operable toreceive records of transactions transferring an interest in units ofsaid valuable commodity from one account to another identified account;said records of transactions including at least an identification of afirst account that will receive a debit, and a second account that willreceive a credit, an amount of the interest in said units of saidvaluable commodity which is being credited to said second account, saidrecords of transactions thereby updating data regarding the balance ofunits of valuable commodity credited to each said account; saidelectronic commodity based system permitting persons to conductfinancial transactions without reliance on national currencies inconducting said financial transactions, whereby obligations, of a personreceiving a said debit of said units of said valuable commodity of theperson's account, to an other person receiving a said credit of saidunits of said valuable commodity to the other person's account, areextinguished upon posting of said records of transactions, therebyeliminating payment risk.
 14. A system in accordance with claim 13wherein said valuable commodity comprises a precious metal.
 15. A systemin accordance with claim 14 wherein said precious metal comprises gold.16. A system in accordance with claim 14 wherein said precious metalcomprises silver.
 17. A system in accordance with claim 15 wherein saidgold is specified to a selected purity.
 18. A system in accordance withclaim 14 further comprising means for remote access to submit records oftransactions to instantly debit and credit a person's accounts.
 19. Asystem in accordance with claim 18 further comprising verification meansfor verifying the identity of said person obtaining access to saidcomputer system and for confirming that said person is authorized tosubmit records of transactions to said transaction storage device. 20.An electronic gold based system for conducting financial transactions,comprising: at least one deposit site having a protected vault; aninventory of gold stored in said protected vault at a said deposit site,said inventory including a quantity of units of gold held at saiddeposit site for an account of at least one identified account; acomputer system for processing data for conducting transactionsdenominated in said units of gold, said computer system having at leastone data storage device and data processing software that records abalance of units of gold credited to each said account; said softwarebeing operable to receive records of transactions transferring aninterest in units of gold from one account to another identifiedaccount; said records of transactions including at least anidentification of a first account that will receive a debit, and asecond account that will receive a credit, an amount of the interest insaid units of gold which is being credited to said second account, saidrecords of transactions thereby updating data regarding the balance ofunits of gold credited to each said account; said electronic gold basedsystem permitting persons to conduct financial transactions withoutreliance on national currencies in conducting said financialtransactions, whereby obligations, of a person receiving a said debit ofsaid units of gold of the person's account, to an other person receivinga said credit of said units of gold to the other person's account, areextinguished upon posting of said records of transactions, therebyeliminating payment risk.
 21. A system in accordance with claim 20further comprising means for remote access to said computer system tosubmit and store records of transactions.
 22. A system in accordancewith claim 20 wherein said gold is of a selected purity.
 23. A method ofpayment, using a valuable commodity as a deposit currency, implementedby a computer system, comprising the steps of: creating a depositaccount data file for each of a plurality of persons, each said depositaccount data file identifying a person, and a number of units ofvaluable commodity stored at a deposit site for the benefit of theperson; entering records of transactions denominated in units of saidvaluable commodity, said records of transactions including at least anidentification of a person who will receive a debit, a person who willreceive a credit, the amount of such debit in units of said valuablecommodity, the amount of such credit in units of said valuablecommodity; posting said records of transactions to debit and credit thedeposit account data files of said persons to update said dataidentifying a number of units of said valuable commodity held for theaccount of each said person; the quantity of units of said commoditycredited to said deposit account data files not exceeding a retainedinventory of said commodity; said method permitting persons to conductfinancial transactions without reliance on national currencies inconducting said financial transactions whereby obligations, of a personreceiving a said debit of said units of said valuable commodity, toanother person receiving a said credit of said units of said valuablecommodity, are extinguished upon posting of said records oftransactions, thereby eliminating payment risk.
 24. A method inaccordance with claim 23 wherein said valuable commodity comprises aprecious metal.
 25. A method in accordance with claim 24 wherein saidprecious metal comprises gold.
 26. A method in accordance with claim 24wherein said precious metal comprises silver.
 27. A method of payment,using an electronic valuable commodity-based payment system which doesnot permit fractional banking, comprising the steps of: using a usercomputer operably connected to a communications network to obtain accessto the electronic valuable commodity-based payment system; entering oneor more of an account number and a password to obtain access to a useraccount; entering instructions on said user computer to be transmittedto said electronic commodity-based payment system, said instructionsincluding a specification of a number of units of a valuable commodityto be transferred from said user account and an identification of arecipient to receive payment of a number of units of the valuablecommodity; the quantity of units of said commodity credited to saiddeposit account data files not exceeding a retained inventory of saidcommodity; said method permitting a user to make a payment withoutreliance on national currencies in conducting said financialtransactions, thereby eliminating payment risk.
 28. A method inaccordance with claim 27 wherein said valuable commodity comprises aprecious metal.
 29. A method in accordance with claim 28 wherein saidprecious metal comprises gold.
 30. A method for facilitating financialtransactions, comprising: recording in memory of a computer system afirst balance for a first account, said first balance representing afirst quantity of a valuable commodity stored at one or more securedeposit sites; recording in memory of said computer system a secondbalance for a second account, said second balance representing a secondquantity of the valuable commodity stored at said one or more securedeposit sites; receiving a payment instruction at said computer systemvia a communications network, the payment instruction specifying aquantity of the valuable commodity, an account to be debited, and anaccount to be credited, wherein the account to be debited is the firstaccount and the account to be credited is the second account; inresponse to receipt of said payment instruction: debiting by thecomputer system the first account; and crediting by the computer systemthe second account; the quantity of units of said commodity credited tosaid accounts not exceeding a retained inventory of said commodity; saidmethod permitting persons to conduct said financial transactions withoutusing national currencies, whereby an obligation of the first person tothe second person is extinguished when said second account is credited,thereby eliminating payment risk.
 31. The method of claim 30, whereinthe valuable commodity is gold.
 32. A computer program embodied on acomputer-readable medium and comprising code that, when executed on acomputer, causes the computer to perform the following steps: receivepayment instructions denominated in units of electronic gold, saidpayment instructions including at least an identification of a personwho will receive a debit, a person who will receive a credit, and anamount of units of said electronic gold; posting said paymentinstructions to debit and credit account data files of said persons toupdate data identifying a number of units of said electronic gold heldfor each said person; whereby said persons may make and receive apayment without reliance on national currencies in conducting saidfinancial transactions, thereby eliminating payment risk.
 33. Anelectronic commodity-based system for conducting financial transactions,comprising: at least one deposit site having secure facilities forstorage of a valuable commodity; an inventory of a valuable commoditystored in said secure facilities at said deposit site, said inventoryincluding a quantity of units of said valuable commodity held at saiddeposit site for at least one identified account; a computer system forprocessing data for conducting transactions denominated in said units ofsaid valuable commodity, said computer system having at least one datastorage device and data processing software that records a balance ofunits of said valuable commodity credited to each said account; saidsoftware being operable to receive payment instructions transferring aninterest in units of said valuable commodity from one account to anotheraccount; said payment instructions including at least an identificationof a first account that will receive a debit, and a second account thatwill receive a credit, an amount of units of said valuable commodity,said payment instructions thereby being used to update data regardingthe balance of units of said valuable commodity credited to each saidaccount; said electronic commodity-based system permitting persons toconduct financial transactions without reliance on national currenciesin conducting said financial transactions, whereby obligations of aperson whose account receives said debit of said valuable commodity toanother person whose account receives said credit of said valuablecommodity, are extinguished upon posting of said payment instructions,thereby eliminating payment risk.
 34. An electronic commodity-basedsystem in accordance with claim 33, wherein the valuable commodity isgold.
 35. An electronic commodity-based system for conducting financialtransactions, comprising: one or more secure deposit sites for storageof a valuable commodity; an inventory of the valuable commodity storedin said one or more secure deposit sites; a computer system forprocessing data associated with transactions denominated in units ofsaid valuable commodity, said computer system being adapted to: maintaina plurality of accounts, each account having a balance representing aquantity of the valuable commodity stored at said one or more securedeposit sites, wherein said accounts include a first account associatedwith a first person and a second account associated with a secondperson; receive a payment instruction via a communication network, thepayment instruction specifying a quantity of the valuable commodity, anaccount to be debited, and an account to be credited, wherein theaccount to be debited is the first account and the account to becredited is the second account; in response to receipt of said paymentinstruction: debit the first account; and credit the second account; andsaid electronic commodity-based system permitting persons to conductsaid financial transactions without using national currencies, wherebyan obligation of the first person to the second person is extinguishedwhen said second account is credited, thereby eliminating payment risk.36. An electronic commodity-based system in accordance with claim 35,wherein the valuable commodity is gold.
 37. An electroniccommodity-based system for conducting financial transactions,comprising: one or more secure deposit sites for storage of a valuablecommodity; an inventory of the valuable commodity stored in said one ormore secure deposit sites; a computer system for processing dataassociated with transactions denominated in units of said valuablecommodity, said computer system being adapted to: maintain a pluralityof accounts, each account having a balance representing a quantity ofthe valuable commodity stored at said one or more secure deposit sites,wherein said accounts include a first account associated with a firstperson and a second account associated with a second person; receive apayment instruction via the Internet, the payment instruction specifyinga quantity of the valuable commodity, an account to be debited, and anaccount to be credited, wherein the account to be debited is the firstaccount and the account to be credited is the second account; inresponse to receipt of said payment instruction: debit the firstaccount; and credit the second account; and said electroniccommodity-based system permitting persons to conduct said financialtransactions without using national currencies, whereby an obligation ofthe first person to the second person is extinguished when said secondaccount is credited, thereby eliminating payment risk.
 38. The system ofclaim 37 wherein the valuable commodity is gold.
 39. A method ofpayment, using an electronic gold based payment system which does notpermit fractional banking, comprising the steps of: using a usercomputer operably connected to a communications network to obtain accessan electronic gold based payment system; entering one or more of anaccount number and a password to obtain access to a user account;entering instructions on said user computer to be transmitted to saidelectronic gold based payment system, said instructions including aspecification of a number of units of electronic gold to be transferredfrom said user account and an identification of a recipient to receivesaid payment of a number of units of electronic gold; said methodpermitting a user to make a payment without reliance on nationalcurrencies in conducting said financial transactions, therebyeliminating payment risk.
 40. A method in accordance with claim 39wherein said identification of a recipient is an identification of arecipient account number.
 41. An electronic gold based payment systemwhich does not permit fractional banking, comprising: a user computeroperably connected to a communications network; means for entering oneor more of an account number and a password to said user computer toobtain access to a user account; means for entering instructions on saiduser computer, said instructions including a specification of a numberof units of electronic gold to be transferred from said user account andan identification of a recipient to receive said payment of a number ofunits of electronic gold; said system permitting a user to make apayment without reliance on national currencies in conducting saidfinancial transactions, thereby eliminating payment risk.
 42. A methodin accordance with claim 41 wherein said identification of a recipientis an identification of a recipient account number.